Donnelley Financial Solutions (NASDAQ: DFIN) and Bankrate (NYSE:RATE) are both small-cap industrials companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, earnings, risk and dividends.

Institutional and Insider Ownership

47.2% of Bankrate shares are owned by institutional investors. 6.3% of Bankrate shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Donnelley Financial Solutions and Bankrate’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Donnelley Financial Solutions 6.48% 51.81% 7.57%
Bankrate -4.61% 6.50% 4.08%

Analyst Recommendations

This is a summary of current ratings and target prices for Donnelley Financial Solutions and Bankrate, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Donnelley Financial Solutions 0 3 1 0 2.25
Bankrate 0 4 3 0 2.43

Donnelley Financial Solutions presently has a consensus target price of $24.33, suggesting a potential upside of 17.44%. Bankrate has a consensus target price of $12.71, suggesting a potential downside of 8.53%. Given Donnelley Financial Solutions’ higher probable upside, equities analysts clearly believe Donnelley Financial Solutions is more favorable than Bankrate.

Earnings and Valuation

This table compares Donnelley Financial Solutions and Bankrate’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Donnelley Financial Solutions $1.00 billion 0.70 $140.60 million N/A N/A
Bankrate $476.96 million 2.60 $101.21 million ($0.25) -55.60

Donnelley Financial Solutions has higher revenue and earnings than Bankrate.

About Donnelley Financial Solutions

Donnelley Financial Solutions, Inc. is a financial communications services company that supports global capital markets compliance and transaction needs for its corporate clients and their advisors (such as law firms and investment bankers), and global investment markets compliance and analytics needs for mutual fund companies, variable annuity providers and broker/dealers. The Company provides content management, multi-channel content distribution, data management and analytics services, collaborative workflow and business reporting tools, and translations and other language services in support of its clients’ communications requirements. The Company operates in two business segments: United States and International. The United States segment consists of three reporting units: capital markets, investment markets, and language solutions and other. The International segment includes its operations in Asia, Europe, Latin America and Canada.

About Bankrate

Bankrate, Inc. is a publisher, aggregator and distributor of personal finance content on the Internet. The Company provides consumers personal finance editorial content across multiple vertical categories, including mortgages, deposits, credit cards, senior care and other personal finance categories. The Company’s segments include Banking, Credit Cards, Senior Care and Other. The Company provides a range of digital display advertising formats. The Company is also engaged in the sale of print advertisements and the distribution (or syndication) of its editorial content. The Company offers branded content that educates consumers and financial professionals on a range of personal finance topics. The Company provides a platform for consumers searching for competitive rates on mortgages, deposits and money market accounts.

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